Monday, July 23, 2012

Oriental Holding

The cash and asset rich group is making a diversified conglomerate grounded in plantations, autos and real estate. With rm3.80 net cash per share and another rm3.30 in landbank and real estate assets, investors are getting their plantations and auto earnings for free.

The group’s landbank stands at 76920ha of which 36% or 27654ha are planted. Of the planted oil palm estates, 82% is in Indonesia with 4840ha in Pahang and NS. It enjoys high yields because most of its planted estates are in their prime. Oriental is among smallest of the listed planters but will, after completing its planting programme, be uniquely positioned as the only Malaysian company with almost all its concession assets in Indoensia.

Oriental has only 15% of Honda Malaysia Sdn Bhd. It still has about 12% share of all Honda cars sold locally, has started distributing Hyundai cars and has 49% stake of the motorcycle wholesale business.

The startup losses from the investment in healthcare via a 1000 acre medical tourism project in Melaka as a risk but is mitigated from the enlarged group’s experience and track record in the industry.

Oriental has also started mergers and acquisitions that could further enhance its value. The focus on any M&As is expected to be on plantations. Potential restructuring between privately held assets and assets held in Oriental would be positive.

Its 60% earnings come from plantations and investment income. This stable earnings stream will increase further over the long term as the group expands its plantated area and diversifies into healthcare.

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Please note that all data given are merely blogger's opinion. It is strongly recommended that you do your own analysis and research before investing.